VectorVest has always advocated buying great stocks that are rising in price in a rising market. Lately, they have also stressed the buying rising industries in stock selection. Why? When an industry group (IG) is rising, it tends to lift all stocks with the industry. What’s that old adage, A rising tide lifts all boats? It’s true in the stock market as well. When the overall market is rising, and the stocks in a particular industry are rising, the likelihood of your stock also rising is so much greater.

Take the Retail (Food) industry group for example. After moving virtually sideways for several months, the industry group started to rise in early July. By July 16 it had moved to 42 from 62 in VectorVest’s IG rankings; the average price of the group was above the 40-day SMA; and RT was rising. Using our Quicktest function, we can quickly see that 7 of 8 stocks in the IG are up more than 10% since then, even with the market downturn Sept 5 to Oct 20. Alimentation Couche-Tard (ATD.B), the top VST stock on July 16, gained 37%. The weakest VST stock, GCL, lost 11%. George Weston (WN) gained 17%; Premium Brands (PBH) 14%; Metro Inc (MRU) 20%; and even slow and steady Loblaw added 23%.

Retail Food Industry Nov 16 2014

On the other hand, it’s hard to find a gold/silver stock that’s made any money for anyone since August. The IG has been in a terrible downturn. VectorVest, by allowing us to graph the entire industry trend, helps us avoid getting into certain industries too soon, and know when to move out of a stock whose industry is starting to show signs of collapsing. Looking at the chart below, the top 10 Gold Digger stocks on June 11 gained an average of 13.95% to June 30. No losers. Those same 10 stocks, if you held them from June 11 right through to Oct 31, would have lost more than 34%.

Gold Silver Industry Graph Nov 15 2014

WEBINAR SOTW Q&A. VectorVest’s Manager of Education Brian D’Amico delivered another excellent presentation Friday showing us, Four Ways to Find Great Stocks in Hot Industry Groups.

Please join me tomorrow, (Monday) Nov. 17 at 1:00 p.m. EDT, for our regular SOTW Q&A review. We’ll take a look at the current market conditions in Realtime and follow Brian’s strategy for finding great stocks in the hottest industries. To register for the webinar, go to the Friday’s VectorVest Views, or just click on the following link:

I’ll also be presenting a special Questrade/VectorVest partnership on Wednesday this week titled, How To Develop A Winning Trading Plan. That’s Thursday, Nov. 20 at 4:30 EDT. There are always some special offers for customers of both Questrade and VectorVest, so I hope you’ll tune in to find out what they will be this month. To register, click on the following link:

That’s all for now. I’ll look forward to speaking with you and hearing from you on these Blog pages over the coming weeks and months.

Good investing everyone.

Stan Heller
Consultant, VectorVest Canada